How Innovation Became A Core Competency For Neiman Marcus

The new Neiman Marcus store in Dallas-Fort Worth is both very much like — and completely different from — the 42 other Neiman Marcus stores scattered throughout the United States.

As part of the Neiman’s family of stores, the core experience is consistent and familiar: high-end men and women’s apparel and shoes, handbags, jewelry, cosmetics, fragrances and gifts, lots of designer names (Prada, Ralph Lauren and Dolce & Gabbana are all particularly front and center in the new Fort Worth store) and attentive personalized customer service from sale associates.

But this Neiman’s is also very different. The layout has been re-arranged to accommodate a self-serve cosmetic area and a fragrance room that gives shoppers the option to explore perfumes by scent type instead of brand. The new cosmetics section also features two spa rooms and a consultation bar that creates a space for outside vendors to offer beauty treatments.

And cosmetics isn’t the only department that has gotten a makeover.

Those in search of new bling now have the option of ducking into a private presentation room to be alone with the diamonds they are trying on and hopefully walk out owning.

And then there are the tech upgrades. The new Neiman’s prominently features interactive MemoMi mirrors that customers can use to take short videos of themselves in clothes to compare side-by-side with other outfits. Those mirrors will do a similar trick for customers trying on sunglasses or make-up. In fact, those mirrors will also record a video of the make-up tutorial one received in store and email it to the customer for future reference. The store also features charging station for phones and a RockBot, which allows customers to download an app and select a song to play across the second floor.

And while the upgrades are various, they all come together to tell a single story about how Neiman Marcus is looking to reinvent retail for an entirely new digital world — and digital consumer.

“This is how the world is,” Neiman Marcus’ Scott Emmons told Karen Webster in a recent conversation. “You have to give a customer a reason to get into the car and drive to the store. It’s not enough to have great product[s] — that is just the basic core. If you aren’t selling what they want, well, then it may be hopeless. But even having those great products isn’t enough — customers expect the whole experience to be entertaining, frictionless, personalized. Those all have to be part of the experience, and that is what we are thinking about when we think about new technology.”

Emmons spends an awful lot of time thinking about new technology — and the experiences it can build. He’s the head of Neiman Marcus’ Innovation Lab. Founded in 2012, the Lab has one of those simple/not so simple missions — to hit reset on the Neiman Marcus experience in a way that both holds onto their highly desirable base of affluent and loyal customers and also branches out even further.

“If we only focus on the core, then we never bring any new customers into that circle. Across markets we are always thinking about delivering the best experience to our best customer always. But how do we make that circle bigger and deliver that across the board to people who have taken the time to walk in the door so that we are creating that relationship that ends up creating a new, repeat customer?”

So far the reviews in Dallas have been strong and encouraging. So what’s the secret sauce and what’s next, Webster wanted to know. In a word, Emmons said, probably some mistakes…

Learning to Really Love the Learning Experience

In the era of technology and “move fast and break stuff,” people often are quick to applaud the high educational nature of failure — yet, Emmons noted, in retail, that enthusiasm is usually quite a bit more subdued.

“It is a lot harder to do than to say,” Emmons said. “It takes a while to get acceptance, and if we only use immediate success as a measure, every program would be terminated early.”

The point of experimenting, he noted, is that even what doesn’t work initially can almost always be applied down the road. The goal, he said, is keeping in mind the customer issue or problem that they are trying to solve.

Take, for example, Neiman’s relationship with mobile payments. Payments is nearly the end point of a transaction that they more or less have to think about from end to end, which means it is a step they are particularly interested in removing as much friction from as possible.

But, Emmons noted, they have still moved fairly cautiously with mobile wallet integration, because what rolled out initially didn’t suit their whole range of needs, and was consequently shuttered.

“I think one of the big barriers we had that also meant we didn’t move as fast as we might have with the mobile wallet was the lack of integration with private label cards — which is a very important part of our business. When you look at what the players out there were offering, it was very cool, but we couldn’t put our private label card into that solution, so it was a total non-starter.”

A private label card that is the epitome of private label cards. Neiman’s InCircle rewards program is legendary and drives roughly 60 percent of its retail sales.

What’s Next

Loyalty, Emmons said, is an evolving concept in retail. And technology done right acts as an organic extension of a loyalty program, because at the end of the day, it is offering a reward: A better experience for the customer.

And that better experience, he told Webster, is about more than the new Dallas-Fort Worth store — it’s about what’s next for the brand.

“The Fort Worth store offered a unique opportunity since we were building from the ground up, and it is right in my backyard here, so we really wanted to take advantage of trying technology in a bigger way,” Emmons said.

But everything they learn is applied downstream — and Neiman’s is just getting started. That means some of these innovations will be applied in various forms in places like their Boston location, which is currently being renovated.

It also means these concepts will be expanded upon and enhanced, as in their new Hudson Park location in Manhattan.

“That is a gateway store and a big deal. And I want to help Neiman Marcus deliver a big splash on that innovative customer technology side,” Emmons said.

What the next big things in Neiman’s retail tech arsenal will look like — on that Emmons was a bit more close-mouthed, since they’d rather not spill the beans.

But, he noted, a glance at the retail landscape paints a pretty cool picture of the possible. AR and VR — which has been prohibitively expensive for customers and merchants — could evolve to become a realistic tool for both. Customer sets are cheap enough to own, and the cost of 3D digitizing goods is falling, so creating those fully interactive displays is becoming feasible.

“The economics of that are making more sense, and we are getting close to the inflection point where we could actually do something at scale.”

Similarly, he noted, AI is coming along to the point where a chatbot can actually be a useful part of a retail process by taking care of a lot of the pro forma stuff early on.

“If the chatbot can take care of all the easy wrote stuff, it allows our associates to deliver the white glove serve we are so famous for to a larger circle of customers.”

Doing anything different isn’t easy — and nothing works quickly, Emmons said. But doing different is the only way to do it better, he noted. And the result in Fort Worth indicates that if you can do it better, it gets a whole lot easier to convince customers to come in.